However, the 1.4 version is packaged to install into /usr/local/... rather than /usr/...

This was discovered when attempting a compile that couldn't find the files.

Unfortunately, there seems no easy way to use the package manager to 'downgrade' since gslapt wants to uninstall a couple dozen other packaages it thinks are dependent, even though the 'downgrade' would just put back the original libgpg-error files.

Is is possible to get a corrected libgpg-error 1.4 package that unpacks into the proper places?

We are no longer accepting any packages for the VL 5.8 repo per Vector, the founder of Vector Linux. VL 5.8 has reached end of life and I will be making that announcement formally per Vector's instructions. So, the short answer is sorry but no.

If you are not going to fix the broken package, then you should, at the very least, remove it from the repository so that nobody else is suckered into installing what they believe to be a patch/fix for the properly performing predecessor.